Traderbill's Financial Markets Weblog

Bloomberg Quote of the Day: “Knowledge is the only instrument of production that is not subject to diminishing returns.” – John Maurice Clarke…especially if it is ‘insider’ knowledge – TB..

Cap and trade, Cap and trade
Come on, mateys, Cap and trade
Cap and trade
Cap and trade, Cap and trade
Cap and trade, Cap and trade

(Refrain)

Never need a reason,
Never need a spade
Cap and trade, you Cap and trade!

Kick your knees up!
Kick your knees up, Cap and trade,
Kick your knees up, Cap and trade

Round the chimney!
Round the chimney, Cap and trade
Round the chimney, Cap and trade

Flap like a birdie!
Flap like a birdie, Cap and trade
Flap like a birdie, Cap and trade

Never need a reason,
Never need a fade
Flap like a birdie, Cap and trade

Up on the railing!
Up on the railing, Cap and trade
Up on the railing, Cap and trade

Over the rooftops!
Over the rooftops, Cap and trade

-apologies to readers, to Dick Van Dyke and Julie Andrews and Mary Poppins! TB

…TB’s take is that Cap and Trade is possibly the worst conceived idea at the worst possible time yet proposed with good intentions…the same way the road to hell is paved. Furthermore, Goldman Sachs and other trading firms will be the primary beneficiaries on what will be a huge tax on the populace. As Matt Tabibbi said in the article cited yesterday a tax would be preferable where the government would at least be collecting and we would know how much rather than a dealer…oh TB forgot…a bank! Also, a dealer who has a conflict of interest due to its own investments in companies that would be ‘selling’ the credits such as windpower. So cap and trade is more or less ‘step in time’ with Goldie singing to the top of its lungs. What in hell have we created? Hell?

While TB would like to put a stop to global warming it as clear at the G-8 meeting that the developing nations don’t. They do not want to see the status quo keeping them from gaining their ‘rightful’ place among the wealthy nations. China is producing enormous greenhouse gases and more as they drive more cars. The U.S. is arguably the cleanest of the large industrial nations yet we are to bear the brunt of it even as our economy (as well as financial system and government is a shambles?) Interesting that when we were in the good times we refused to sign the Kyoto Accord….but now? There has to be a way but it shouldn’t involve enriching a bank (sic).

The manipulated oil market is coming apart at the seams not that the threat of regulation has reared its head. Don’t forget it was Goldman Sachs analysts who targeted oil at $70-75 a barrel…amazing when there are no containers in the world that are not filled with the stuff except coffee cans! They were big on ‘peak oil’ the last go round and saw demand in every corner of the world when the only ‘corner’ was in the commodities market. Why is there no outrage (except TB’s) at running up oil prices just to make a quick buck while destroying the world economy and at a time when the financial system was on the brink of disaster? Reasonable people can differ reasonably, but TB saw thru this sham from the very beginning while stern faces told us to ‘drill, drill, drill.’

A year ago crude oil prices peaked at $147.27 and according to a Bloomberg story have been thru their most volatile 12 months in a decade…and finally the CFTC is going to investigate it…never happen under the Bushie’s…in fact it didn’t even among the double whammy of the redundant Cox-led SEC which did nothing to stop the pain in stocks. It shouldn’t take a rocket scientist to figure out that anyone participating in a commodities market with unlimited postions…especially a bank (sic) which even under the old definition included Goldman Sachs and Morgan Stanley…how much longer must we be held hostage to this insanity. When the Bass Brothers cornered the market in silver it didn’t take long for the CFTC to impose strict trading limits which wiped out their postions…but we are talking Goldman Sachs here and money talks!…especially when you have former employees deeply imbedded in the government and are actually hiring one of the firms companies as a consultant on TARP. Gold we are stupid!…or paid off!

It is within this context that one has to question the motives of the bought and paid for elected officials in Washington and that would be a large majority…money talks…and that just suits them fine. Do they not stop to think what they are doing or have they simply been ‘inside the beltway’ too long to give a damn about their constituents?

On to yesterday’s markets…such as they were when volume on the NYSE scarcely topped 1 billion shares and nearly 40% of that volume was the usual suspects: BofA and Citi! For a second straight session new 52 week lows exceeded new highs…something that has not occurred for months and Advance/Declines and Breadth were positive but nothing compared to the negative ratios on the declines. IF we had volume we would have collapsed by now. The 200 day moving averages are continuing to fall while the 40 and 50 day are rolling over and in most cases at convergence and we cannot get above them…that points to only one direction to TB’s way of thinking but how do you even have the guts to sell when there is no proof it will go down…it just can’t go UP! Oil traded below $60 for the firs time since May 26 while Gold gained just $7 despite the dollars fall (the index closed below 80). As for bonds they were in the tank as the string of constant supply continues with the 30 year bond even though it drew 50.2% indirect bids (mainly from foreign central banks), surpassed only by the 65.4% taken down when they started reporting participation in February 2006! But this time the bid to cover ratio was just 2.36x despite the huge indirects which is only about average so there was no pressure to buy. The bond was trading at 4.29% just before the auction and it came at 4.303% which is not bad but the close was also at 4.30% down 1-3/4 points. The well is not bottomless as we shall soon see…

What is wrong with you??? and TB…and all other Americans that we stand idly by and watch our economy destroyed by greed while our politicians get rich…enriched by Wall Street and in particular one unnamed firm…er bank! Goldman Sachs was the top contributor to the Obama campaign ($994k), second only to the University of California ($1.56M).so now you see why every time Obama lashes out it is at BofA…Citi gave $700k). But wait look at the top five contributors to McCain: Merrill Lynch $379k, Citi $322k, Morgan Stanley $268k, Goldman Sachs $230k, and JPMorgan Chase $226k. TB would call the above contributions…all from employees directly not PAC’s, proof positive of Wall Street’s influence on Washington…note that the ‘real’ banks did not show up in size in any of the data. If you can’t see a problem with this, TB can’t help as you are hopelessly lost in the desert.

Have a  fun weekend…but it really is: later than you think.

TB

Trader Bill thinks it is clear to anyone reading these missives that they are merely commentaries…as he sees it…and do not necessarily reflect the views of anyone other than his own. Information is gathered from sources he has found reliable, but no guarantees of accuracy are implied. These are merely observations of events in the marketplace offering in an attempt to offer a non-mainstream viewpoint. Hope you find it useful. Copyright TBD Capital LLC, © July 10, 2009.